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How Much Debt Can We Handle 2

Part 2

We began Part 1 with the above question, how much debt can we handle? $25,000? $50,000? $100,000?

We then discovered that trying to figure out our monthly expenses wasn’t so easy. What are our necessary monthly expenses? We searched and found two neutral approaches to family household expenses. Neither really helped us in figuring out what most people need in terms of necessary expenses.

A friend gave me the following financial disclosure statement for the family courts that provides a better grasp of what today’s working (and separating) families need to live on.

 [If the expense is an annual one, divide the annual amount by 12 and place the result of that division in the Monthly column.]

Monthly

Monthly

Compulsory deductions

 

Health

CPP contributions

MSP premiums

E.I. premiums

Extended health premiums

Income taxes

Dental plan premiums

Employee pension contributions

Health care (net of coverage)

Other (specify)

Drugs (net of coverage)

Sub-total

Dental care (net of coverage)

Housing

Other (specify)

Rent or mortgage

Sub-total

Property taxes

Personal

Property insurance

Clothing

Water, sewer, garbage

Haircare

Strata fees

Toiletries, cosmetics

House repairs and maintenance

Education (specify)

Other (specify)

Life insurance

Sub-total

Dry cleaning/laundry

Utilities

Entertainment/recreation

Heat and electricity

Gifts

Telephone

Other (specify), e.g. alcohol, tobacco

Cable TV

Sub-total

Other (specify), e.g. internet connection

Children

Sub-total

Child care

Household expenses

Clothing

Food

Haircare

Household supplies

School fees and supplies

Meals outside the home

Entertainment/recreation

Furnishings and equipment

Activities and lessons

Other (specify)

Gifts

Sub-total

Insurance

Transportation

Other (specify)

Public transit, taxis

Sub-total

 

Gas and oil

Savings

Car insurance and licence

RRSP

Parking

RESP

Repairs and maintenance

Other (specify)

Lease payments

Sub-total

Other (specify)

Support payments to others

Sub-total

Specify

Other

Sub-total

Charitable donations

Debt payments

Vacation

Specify

Pet care

Sub-total

Newspapers, publications

TOTAL MONTHLY EXPENSES

Other (specify)

TOTAL ANNUAL EXPENSES

Sub-total

[multiply TOTAL MONTHLY EXPENSES by 12

This is a much more comprehensive list that includes Child Support, vacations, RRSP’s, and debt payments.

Now, take a deep breath before reading any further. In many respects, the above financial summary overwhelms. The first question that pops into my mind is this. Who has enough money to meet all of these categories? The second question is this. What do you do if you do not have enough money, (enough income) to meet all of these expenditures?

After taking a hard look at our income and all of our obligations, both family expenses, and creditor payments, we may have to make a few adjustments.

The approach I take, as do most credit counsellors and insolvency practitioners, is to narrow the family expenses down to the absolute necessaries. The more basic budget looks something like this.

My approach allows people to see what they can basically afford for the raw basics.

Then we can ask, “How much can you afford for an RRSP? How much money is left over after the very basics of life are met? What do you do if you don’t have any surplus at all?”

If you find yourself struggling to make even the minimum payments on your debt you need professional help! Don’t wait! Call Solutions Credit Counselling at 1(877) 588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

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